<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 27, 1997
Registration No. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
_________________
HOMEGATE HOSPITALITY, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 75-0511313
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
111 CONGRESS AVENUE, SUITE 2600
AUSTIN, TEXAS 78701
(Address of principal executive offices, including zip code)
____________________
HOMEGATE HOSPITALITY, INC. 1996 LONG-TERM INCENTIVE PLAN
(Full title of the plans)
ROBERT A. FAITH
PRESIDENT AND CHIEF EXECUTIVE OFFICER
HOMEGATE HOSPITALITY, INC.
111 CONGRESS AVENUE, SUITE 2600
AUSTIN, TEXAS 78701
(512) 477-6400
(Name, address and telephone number of agent for service)
copy to:
DEREK R. MCCLAIN
VINSON & ELKINS L.L.P.
3700 TRAMMELL CROW CENTER
2001 ROSS AVENUE
DALLAS, TEXAS 75201-2975
(214) 220-7700
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
============================================================================================================
Proposed
Title of securities Amount to be Proposed maximum maximum aggregate Amount of
to be registered registered offering price per unit* offering price* registration fee
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.01 par
value per share 1,250,000 shares(1) $8.9376 $11,171,937.50 $3,385.43
- ------------------------------------------------------------------------------------------------------------
</TABLE>
* Estimated solely for purposes of calculating the registration fee in
accordance with Rule 457(h) under the Securities Act of 1933 and based on
the average of the high and low prices of the Common Stock reported on The
Nasdaq National Market on January 24, 1997.
(1) Includes 13,913 shares of Common Stock offered pursuant to the reoffer
prospectus filed herewith.
================================================================================
<PAGE>
PART I
INFORMATION REQUIRED IN THE SECTION 10(A) PROSPECTUS
The documents(s) containing the information called for in Part I of Form S-
8 will be provided to participants in the Homegate Hospitality, Inc. 1996 Long-
Term Incentive Plan (the "1996 Plan"), adopted by Homegate Hospitality, Inc., a
Delaware corporation (the "Company"). Such information is not being filed with
or included in this registration statement in accordance with the rules and
regulations of the Securities and Exchange Commission (the "Commission"). There
is also included as part of Part I of this Registration Statement a reoffer
prospectus relating to the reoffer and resale of shares of common stock, par
value $0.01 per share (the "Common Stock"), of the Company as permitted by
General Instruction C for Form S-8.
<PAGE>
PROSPECTUS
HOMEGATE HOSPITALITY, INC.
13,913 SHARES OF COMMON STOCK
This Prospectus relates to the periodic offer and sale by each of the Selling
Stockholders named herein (collectively, the "Selling Stockholders") of up to an
aggregate of 13,913 shares (collectively, the "Shares") of Common Stock of the
Company which were issued pursuant to the 1996 Plan.
The Selling Stockholders may offer the Shares from time to time to purchasers
directly or through underwriters, dealers or agents. The Shares may be sold at
market prices prevailing at the time of sale or at negotiated prices.
The Common Stock, including the Shares, is listed on the Nasdaq National
Market ("NASDAQ"). The Company will not receive any of the proceeds from the
sale of the Shares by the Selling Stockholders. The address of the principal
executive offices of the Company is 111 Congress Avenue, Suite 2600, Austin,
Texas 78701, and its telephone number at that address is (512) 477-6400.
____________________
SEE "RISK FACTORS" BEGINNING ON PAGE 4 FOR A DISCUSSION OF CERTAIN RISK
FACTORS THAT SHOULD BE CONSIDERED PRIOR TO PURCHASING ANY OF THE SHARES.
____________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is January 27, 1997.
<PAGE>
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION
OTHER THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS, AND,
IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN
OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE
SHARES OFFERED BY THIS PROSPECTUS OR AN OFFER TO SELL OR A SOLICITATION OF AN
OFFER TO BUY ANY OF THE SHARES IN ANY JURISDICTION WHERE, OR TO ANY PERSON TO
WHOM, IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF
THIS PROSPECTUS NOR ANY SALE OR DISTRIBUTION OF SECURITIES MADE HEREUNDER SHALL,
UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN
THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE INFORMATION HEREIN
IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
AVAILABLE INFORMATION
Pursuant to the Securities Act of 1933 (the "Securities Act"), the Company has
filed with the Commission a Registration Statement on Form S-8 (together with
all amendments and exhibits thereto, the "Registration Statement") of which this
Prospectus is a part. This Prospectus does not contain all the information set
forth in the Registration Statement, to which reference is hereby made for
further information. Statements made in this Prospectus as to the contents of
any contract, agreement or other document referred to are not necessarily
complete. With respect to each such contract, agreement or other document filed
as an exhibit to the Registration Statement, reference is hereby made to the
exhibit for a more complete description of the matter involved, and each such
statement shall be deemed qualified in its entirety by such reference.
The Company is subject to the informational and reporting requirements of the
Securities Exchange Act of 1934 (the "Exchange Act"), and in accordance
therewith files periodic reports, proxy and information statements and other
information with the Commission. The Registration Statement, as well as such
reports, proxy and information statements and other information filed by the
Company with the Commission, may be inspected, without charge, at the public
reference facilities maintained by the Commission at Room 1024, Judiciary Plaza,
450 Fifth Street, N.W., Washington, D.C. 20549, and at the regional offices of
the Commission located at 7 World Trade Center, 13th Floor, New York, New York
10048, and at CitiCorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661-2511. Copies of such material, when filed, may also be obtained
from the Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549 at prescribed rates. Copies of such materials may also
be obtained from the web site that the Commission maintains at www.sec.gov.
TABLE OF CONTENTS
Page
----
AVAILABLE INFORMATION.............................................. 2
RISK FACTORS....................................................... 4
PLAN OF DISTRIBUTION............................................... 12
SELLING STOCKHOLDERS............................................... 13
USE OF PROCEEDS.................................................... 13
LEGAL OPINION...................................................... 13
EXPERTS............................................................ 13
2
<PAGE>
DOCUMENTS INCORPORATED BY REFERENCE
The following documents filed with the Commission, and the information
included therein, are hereby incorporated by reference in this Prospectus:
(a) Current Report on Form 8-K as filed with the Commission pursuant to the
Exchange Act, on January 15, 1997;
(b) Quarterly Report on Form 10-Q for the quarterly period ended September
30, 1996, as filed with the Commission pursuant to the Exchange Act, on
December 9, 1996;
(c) The Company's prospectus dated October 24, 1996, as filed with the
Commission pursuant to Rule 424(b) under the Securities Act; and
(d) The description of the Company's Common Stock, $.01 par value per share,
contained in Item 1 of the Company's Registration Statement on Form 8-A
(File No. 0-21509) filed with the Commission pursuant to the Exchange
Act on October 9, 1996.
All documents subsequently filed by the Company pursuant to Sections 13(a),
13(c), 14 and 15(d) of the Exchange Act prior to the termination of the offering
of the Shares made hereby shall also be deemed to be incorporated by reference
herein and to be part hereof from the dates of filing of such documents. Any
statement contained in a document incorporated or deemed to be incorporated by
reference herein shall be deemed to be modified or superseded for purposes of
this Prospectus to the extent that a statement contained herein or in any
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus. Upon the written or oral request of any
person to whom a copy of this Prospectus has been delivered, the Company will
provide without charge to such person a copy of any and all documents (excluding
exhibits thereto unless such exhibits are specifically incorporated by reference
into such documents) that have been incorporated by reference into this
Prospectus but not delivered herewith. Requests for such documents should be
addressed to:
Homegate Hospitality, Inc.
Attention: Tim V. Keith
111 Congress Avenue
Suite 2600
Austin, Texas 78701
(512) 477-6400
3
<PAGE>
RISK FACTORS
Any investment in the Common Stock offered hereby involves a high degree of
risk. Prospective investors should read this entire Prospectus carefully and
should consider, among other things, the risks and the speculative factors
inherent in and affecting the Company's business described below and throughout
this Prospectus. This Prospectus contains forward-looking statements that
involve risk and uncertainty. Actual results and the timing of certain events
could differ materially from those projected in the forward-looking statements
as a result of the risk factors set forth below and other factors discussed
elsewhere in this Prospectus.
QUARTERLY FLUCTUATIONS
The Company anticipates that its quarterly earnings will fluctuate as a result
of variations in quarterly operating results and other factors such as changes
in general conditions of the economy, the financial markets or the lodging
industry, natural disasters or other developments affecting the Company or its
competitors.
STOCK PRICE VOLATILITY
The trading price of the Common Stock has been and may continue to be subject
to wide fluctuations in response to quarter-to-quarter variations in operating
results, changes in earnings estimates by analysts, general conditions in the
lodging industry and other events or facts. In recent years the stock market in
general has experienced extreme price fluctuations. This volatility has had a
substantial effect on the market prices of securities issued by many companies
for reasons unrelated to their operating performance. These broad market
fluctuations may adversely affect the market price of the Common Stock.
LIMITED OPERATING HISTORY AND COSTS ASSOCIATED WITH EXPANSION
The Company acquired one extended-stay hotel located in Grand Prairie, Texas
in May 1996 (the "Studio Suites Hotel"), beneficial ownership of five hotels in
September 1996 currently operated under the name "Western Suites" (the "Westar
Transaction") and one extended-stay hotel in December 1996. In addition, as of
January 23, 1997 the Company had eleven hotels under development, nine of
which are under construction and two more of which the Company expects to
begin construction of during the first quarter of 1997). The Company has a
limited operating history upon which investors may evaluate the Company's
performance. The Company has incurred losses to date, and there can be no
assurance that the Company will be profitable in the future. Given the start-up
nature of the Company's operations, it expects to have net losses for the
foreseeable future.
DEVELOPMENT RISKS
The Company intends to grow primarily by developing additional extended-stay
hotels. Development involves substantial risks, including, among others, the
risks that development costs will exceed budgeted or contracted amounts, that
completion of construction will be delayed, that all necessary zoning and
construction permits will not be obtained, that financing might not be available
on favorable terms, that developed properties will not achieve desired revenue
or profitability levels once opened, that competitors with greater financial
resources than the Company will compete for suitable development sites, that
substantial costs will be incurred in the event a development project must be
abandoned prior to completion, that governmental rules, regulations and
interpretations (including interpretations of the requirements of the Americans
with Disabilities Act of 1990 (the "ADA")) will change, and that downturns in
general economic and business conditions will occur. The Company intends to
manage development to reduce such risks. For example, the Company will obtain
guaranties for certain developmental cost overruns from individuals who are
affiliated with Trammell Crow Residential Company and its affiliates ("TCR") and
Greystar Capital Partners, L.P. and its affiliates ("Greystar" and, together
with TCR, the "Developer Affiliates") and will not acquire development
properties until all necessary zoning and construction permits are reasonably
likely to be obtained. However, there can be no assurance that present or future
developments will proceed in accordance with the Company's expectations. In
addition, the developmental cost overrun guaranties will be business asset
guaranties (i.e., recourse will be limited to the individual guarantor's
interests in TCR or Greystar, as appropriate, and some of their affiliates).
There can be no assurance that
4
<PAGE>
such assets will be sufficient to fund the costs of any specific development
cost overrun. The Company currently owns two extended-stay hotels, and has
beneficial ownership of five additional extended-stay hotels which it acquired
in the Westar Transaction. The Company's objective is to have approximately 65
hotels open or under construction by December 31, 1998 (the "Initial Hotel
Program"). There can be no assurance, however, that the Company will complete
the development and construction of the hotels, or will acquire each of the
planned properties and complete development of a Company-owned hotel thereon, or
that any such developments will be completed in a timely manner or within
budget.
RISKS ASSOCIATED WITH RAPID GROWTH
The Company intends to pursue an aggressive growth strategy through the
development of or acquisition of properties suitable for conversion to the
Company's brand name "Homegate Studios & Suites" hotels; its objective is to
have approximately 65 hotels open or under construction by December 31, 1998.
The Company's growth plans will require the implementation of specialized
operational and financial systems and will require additional management,
operational and financial resources. There can be no assurance that the Company
will be able to manage its expanding operations effectively.
The Company has only recently developed its product strategy, which includes
the design of what will be its prototypical hotel and available amenities. As
of January 23, 1997, the first nine hotels embodying its product strategy
were under construction. The Company has limited history upon which
it can gauge consumer acceptance of its facilities, and there can be no
assurance that the Company's hotels will be readily accepted by guests who are
looking for extended-stay hotel accommodations. Further, the Company's hotels
will compete against other facilities with substantially greater brand
recognition.
RISKS ASSOCIATED WITH THE LODGING INDUSTRY
Operating Risks. The extended-stay industry in which the Company operates may
be adversely affected by changes in national or local economic conditions and
other local market conditions, such as an oversupply of hotel space or a
reduction in demand for hotel space in a geographic area, corporate relocations
or downsizing that may produce a reduced demand for local hotel space, changes
in travel patterns, extreme weather conditions, the recurring need for
renovation, refurbishment and improvement of lodging properties, changes in
governmental regulations which influence or determine wages, prices, or
construction or maintenance costs, changes in interest rates, the availability
of financing for operating or capital needs, and changes in real estate tax
rates and other operating expenses. In addition, due in part to the strong
correlation between the lodging industry's performance and economic conditions,
the lodging industry is subject to cyclical change in revenues and profits.
There can be no assurance that downturns or prolonged adverse conditions in real
estate or capital markets, or in national or local economies, will not have a
material adverse impact on the Company.
Competition in the Lodging Industry. Competition in the United States lodging
industry is based generally on convenience of location, price, range of services
and available amenities, and quality of customer service. Each of the Company's
hotels will be located in a developed area that includes competing lodging
facilities. The Company believes the location of its hotels, the high quality of
its accommodations, the reasonableness of its room rates, and the services and
guest amenities provided by it will be among the most important factors in its
business. Demographic or other changes in one or more of the Company's markets
could impact the convenience or desirability of the sites of certain hotels,
which could adversely affect their operations.
The Company anticipates that competition within the extended-stay industry
segment will increase substantially in the foreseeable future. In the midprice
category of the extended-stay industry segment, a number of other lodging chains
and developers have recently announced plans to develop or are currently
developing extended-stay hotels which may compete with the Company's hotels. The
Company may compete for guests and for new development sites with certain of
these established entities and other entities which have greater financial
resources and brand awareness than the Company and better relationships with
lenders and real estate sellers. Further, there can be no assurance that new or
existing competitors, including traditional hotels with nationally recognized
brand names, will not significantly lower
5
<PAGE>
rates or offer greater convenience, services, or amenities or significantly
expand or improve facilities in a market in which the Company's hotels compete,
thereby adversely affecting the Company's operations.
Seasonality. The lodging industry is seasonal in nature. Quarterly earnings
may be adversely affected by events beyond the Company's control, such as poor
weather conditions, economic factors and other considerations affecting travel.
In addition, occupancy rates and room revenues typically decline during the
fourth calendar quarter as business travel decreases during the holiday season.
The timing of openings of new properties could also lead to fluctuations in the
Company's quarterly earnings.
REAL ESTATE INVESTMENT RISKS
General Risks. The Company's investments will be subject to varying degrees of
risk generally incident to the ownership of real property. The underlying value
of the Company's real estate investments depends significantly upon the
Company's ability to operate its properties in a manner sufficient to maintain
or increase cash provided by operations. Income from the properties, and the
value of the properties, may be adversely affected by adverse changes in
national, general or local economic conditions, adverse changes in local market
conditions due to changes in neighborhood characteristics, competition from
other lodging properties, changes in real property tax rates and in the
availability, cost and terms of financing, the impact of present or future
environmental legislation and compliance with environmental laws, the continuing
need for capital improvements, changes in operating expenses, adverse changes in
governmental rules and fiscal policies, civil unrest, acts of God, including
earthquakes and other natural disasters (which may result in uninsured losses),
acts of war, adverse changes in zoning laws, and other factors which are beyond
the Company's control.
Illiquidity of Real Estate. Real estate investments are relatively illiquid.
The Company's ability to vary its portfolio in response to changes in economic
and other conditions will be limited. There can be no assurance that the Company
will be able to dispose of an investment when it finds disposition advantageous
or necessary or that the sale price of any disposition will recover or exceed
the Company's investment.
Losses in Excess of Insurance Coverage. The Company intends to maintain
comprehensive insurance on each of its properties, including liability, fire and
extended coverage, in the types and amounts customarily obtained by an owner and
operator in the Company's industry. Nevertheless, there are certain types of
losses, generally of a catastrophic nature, such as hurricanes, earthquakes and
floods, that may be uninsurable or not economically insurable. The Company will
use its discretion in determining amounts, coverage limits and deductibility
provisions of insurance, with a view to obtaining appropriate insurance on the
Company's properties at a reasonable cost and on suitable terms. This may result
in insurance coverage that in the event of a loss would not be sufficient to pay
the full current market value or current replacement value of the Company's lost
investment. Inflation, changes in building codes and ordinances, environmental
considerations and other factors might also make it impracticable to use
insurance proceeds to replace a hotel after it has been damaged or destroyed.
RELIANCE UPON AFFILIATED COMPANIES
The Company's success will depend, in large part, upon the efforts of TCR,
Greystar and Wyndham Hotel Corporation and its predecessors and affiliates
("Wyndham"), on which the Company is relying to develop, construct, and manage
its extended-stay hotels. The Company has entered into various agreements with
each of these companies which the Company believes will enable it to
successfully achieve its growth objectives. The Company's ability to control and
direct these companies in their performance under such agreements, however, is
limited. If any of these parties fails to meet its obligations to the Company,
that failure could have a material adverse effect on the Company's ability to
achieve its growth objectives.
The Company has entered into a master management assistance agreement
("Management Agreement") with Wyndham, pursuant to which the Company has the
right to enter into property-specific management contracts with Wyndham to
manage up to 60 Company hotels. While there is significant common ownership of
the Company and Wyndham (over 48% of the outstanding common stock of Wyndham is
owned by various descendants of Mr. and Mrs.
6
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Trammell Crow and various corporations, partnerships, trusts and other entities
beneficially owned or controlled by such persons ("Crow Family")), there can be
no assurance that Wyndham will enter into future management contracts or
continue to provide the Company market research, design and other support
services after the Management Agreement has terminated. During the term of the
Management Agreement, the Company is restricted from engaging any other third
party to manage its hotels.
Similarly, the Company has entered into a master development agreement with a
partnership comprised of TCR and Greystar (the "Developer Partnership"),
pursuant to which the Company and the Developer Partnership have agreed to enter
into property-specific development agreements for up to 60 Company hotels. While
there is significant common ownership of the Company and the Developer
Partnership, and the Developer Affiliates will own a significant portion of the
outstanding Common Stock, there can be no assurance that the Company and the
Developer Partnership or the Developer Affiliates will enter into new
development agreements that are acceptable to Company management after the
master development agreement has terminated.
DEALINGS WITH AFFILIATES/CONFLICTS OF INTEREST
Dealings with Affiliates. The Company has engaged and expects to continue to
engage in numerous transactions with affiliates, including the development and
construction of hotels through the Developer Partnership and the management of
hotels through Wyndham. The Developer Partnership owns 10.0% of the outstanding
Common Stock. While Wyndham does not own any of the outstanding Common Stock,
over 48% of Wyndham's outstanding common stock is owned by the Crow Family.
Additionally, each of the Crow Family and Mr. Ron Terwilliger own approximately
20% of the interests in TCR, Mr. Leonard W. Wood owns zero to 30% of various
divisions of TCR, and a majority of the interests in Greystar is owned by Mr.
Robert A. Faith. Mr. Wood and Mr. Terwilliger are both stockholders of the
Company, Mr. Wood serves as a Director of the Company and Mr. Terwilliger is an
Advisor to the Company. Mr. Faith is the Chairman of the Board, President, and
Chief Executive Officer of the Company. In addition, Mr. James D. Carreker is a
Director of the Company, and is the President and Chairman of the Board of
Wyndham. The Crow Family, through Crow Realty Investors, L.P., also own a
significant percentage of the outstanding Common Stock.
While many future transactions with affiliates will be effected pursuant to
existing contracts, the Company may expand its relationships with certain
affiliates to take advantage of such affiliates' capabilities. Although the
Company believes that its transactions with affiliates have been and will
continue to be on terms no less favorable to the Company than those that could
have been obtained from third parties with similar capabilities, there can be no
assurance that its affiliates will continue to transact business with the
Company or that they will not attempt to use their ownership positions in the
Company to influence the terms on which they transact business with the Company
in the future.
Policy with Respect to Related Party Transactions. The Company has implemented
a policy requiring any material transaction (or series of related transactions)
between the Company and related parties to be approved by a majority of the
directors who have no beneficial or economic interest in such related party (the
"Disinterested Directors"), upon such Directors' determination that the terms of
the transaction are no less favorable to the Company than those that could have
been obtained from third parties. The policy defines a material related party
transaction (or series of related transactions) as one involving a purchase,
sale, lease or exchange of property or assets or the making of any investment
with a value to the Company in excess of $1.0 million or a service agreement (or
series of related agreements) with a value in excess of $1.0 million in any
fiscal year. There can be no assurance that this policy will always be
successful in eliminating the influence of conflicts of interest.
NEW MANAGEMENT
Since its formation in February 1996, the Company has recruited a management
team, none of whom have had prior experience in the extended-stay industry
segment in which the Company is engaged. Similarly, neither TCR, Greystar nor
Wyndham have prior experience in the development or management of extended-stay
hotels. The Company's success will depend upon the ability of management, TCR,
Greystar and Wyndham to develop expertise in developing and managing its
extended-stay lodging business.
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RISK OF BORROWING
The Company expects to borrow substantial capital for its expansion. Pursuant
to a $30 million mortgage loan facility (the "Existing Mortgage Facility") with
Bank One, Arizona, N.A. ("BOA"), the Company may currently borrow up to $30
million to finance its acquisition and construction of properties. This
compares to total equity of $65 million as of November 30, 1996. The
Company's borrowings under the Existing Mortgage Facility will be secured by
mortgages on the Company's properties and various accounts and other assets. The
Company will be required to procure substantial additional capital over time to
complete its Initial Hotel Program, including additional construction loans to
finance the construction of additional extended-stay facilities. The Company is
currently negotiating a $78 million facility to be provided by BOA to replace
the Existing Mortgage Facility. There can be no assurance that such
replacement facility will be obtained. Leverage increases the risks to the
Company of any variations in its results, construction cost overruns, or any
other factors affecting its cash flow or liquidity. In addition, the Company's
interest costs could increase as the result of general increases in interest
rates. The principal and interest amounts to be borrowed under the Existing
Mortgage Facility will be due two years from the date of borrowing, but the term
of such loans may be extended for an additional three years if certain
conditions are met.
In addition, Westar (as defined below), which the Company recently acquired in
the Westar Transaction, has approximately $18 million of mortgage
indebtedness. This indebtedness is secured by the five Westar facilities and
Westar's various accounts and other assets, and is due in monthly installments
through January 11, 2021.
NEED FOR ADDITIONAL CAPITAL
Although the Company has access to financing under the Existing Mortgage
Facility, the Company will need to procure substantial additional financing over
time to complete its Initial Hotel Program, the amount of which will depend upon
a number of factors including the number of properties the Company constructs or
acquires and the cash flow generated by its properties. Including the proceeds
of the Company's initial public offering and the funds available under the
Existing Mortgage Facility, the Company believes that it has sufficient
resources to develop or acquire approximately 18 of the hotels contemplated by
the Initial Hotel Program, based on expected development or acquisition costs.
The Company's Initial Hotel Program calls for the Company to have approximately
65 hotels open or under construction by December 31, 1998. There can be no
assurance regarding the availability or terms of additional financing the
Company may be able to procure over time. The failure of the Company to obtain
the required additional financing needed to complete the Initial Hotel Program
would adversely affect the Company's ability to implement its growth strategy
and would have a material adverse effect on the Company's earnings and results
of operations. In addition, future financing facilities may restrict the ability
of the Company to incur additional debt. The Existing Mortgage Facility and any
future debt financings or issuances of preferred stock by the Company will be
senior to the rights of the holders of Common Stock, and any future issuances of
Common Stock will result in the dilution of the then-existing stockholders'
proportionate equity interests in the Company.
IMPACT OF ENVIRONMENTAL REGULATIONS
The Company's operating costs may be affected by its obligations to pay for
the cost of complying with existing environmental laws, ordinances, and
regulations. Under various federal, state, and local environmental laws,
ordinances, and regulations, a current or previous owner or operator of real
property may be liable for the removal or remediation of hazardous or toxic
substances on, under, or in such property. These laws often impose liability
whether or not the owner or operator knew of, or was responsible for, the
presence of such hazardous or toxic substances. In addition, the presence of
contamination from hazardous or toxic substances, or the failure to remediate
properly such contaminated property, may adversely affect the owner's ability to
borrow using such real property as collateral. Persons who arrange for the
disposal or treatment of hazardous or toxic substances also may be liable for
the costs of removal or remediation of such substances at the disposal or
treatment facility, whether or not such facility is or ever was owned or
operated by such person. Certain environmental laws and common law principles
could be used to impose liability for releases of hazardous materials, including
asbestos-containing materials ("ACMs"), into the environment, and third parties
may seek recovery from owners or operators of real properties for personal
injury associated with exposure to released ACMs or other hazardous materials.
Environmental laws also may impose restrictions on the manner in which property
may be
8
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used or transferred or in which businesses may be operated, and these
restrictions may require expenditures. In addition, in the event any future
legislation is adopted, the Company may, from time to time, be required to make
significant capital and operating expenditures in response to such legislation.
In connection with the ownership of its properties, the Company may be
potentially liable for any such costs. The cost of defending against claims of
liability or remediating contaminated property and the cost of complying with
environmental laws could materially and adversely affect the Company's results
of operations and financial condition.
The Company attempts to minimize its exposure to potential environmental
liability through its site-selection procedures. The Company typically secures
an option to purchase land subject to certain contingencies. Prior to exercising
such option and purchasing the property, the Company conducts a Phase I
environmental assessment ("Phase I Surveys"), which generally involves a
physical inspection and database search, but not soil or groundwater analyses.
To date, the Phase I Surveys have not revealed any environmental liability or
compliance concern that the Company believes would have a material adverse
effect on the Company's business, assets, results of operations, or liquidity,
and the Company is not aware of any such liability or concern. Nevertheless, it
is possible that Phase I Surveys will not reveal all environmental liabilities
or compliance concerns or that there will be material environmental liabilities
or compliance concerns of which the Company will not be aware. Moreover, no
assurances can be given that (i) future laws, ordinances, or regulations will
not impose any material environmental liability, or (ii) the current
environmental condition of the Company's existing and future properties will not
be affected by the condition of the neighboring properties (such as the presence
of leaking underground storage tanks) or by third parties unrelated to the
Company. Thus, there can be no assurance that the Company will not incur
environmental costs which could have a material adverse effect on the Company.
GOVERNMENTAL REGULATION AND COMPLIANCE WITH AMERICANS WITH DISABILITIES ACT
The lodging industry is subject to numerous federal, state and local
government regulations, including building and zoning requirements. A number of
states also regulate the licensing of hotels by requiring registration,
disclosure statements, and compliance with specific standards of conduct. In
addition, the Company is subject to employment laws, including minimum wage
requirements, overtime, working conditions and work permit requirements. Recent
amendments to the minimum wage laws became effective in October 1996 and have
increased the Company's labor costs. The Company believes that the Studio Suites
hotel, the hotel acquired in December 1996 and each of the Westar hotels have
the necessary permits, approvals and licenses to operate their respective
business and that collectively they comply with the applicable employment laws,
and the Company intends to continue to comply with such laws and regulations. A
change in such building, zoning, or licensing requirements or a further increase
in the minimum wage rate, employee benefit costs or other costs associated with
employees could materially and adversely affect the Company.
Under the ADA, all public accommodations are required to meet certain federal
requirements related to access and use by disabled persons. While the Company
believes that its existing hotels and the Westar hotels are substantially in
compliance with these requirements, a determination that the Company is not in
compliance with the ADA could result in the imposition of fines or an award of
damages to private litigants. In addition, changes in governmental rules and
regulations or enforcement policies affecting the use and operation of the
facilities, including changes to building codes and fire and life-safety codes,
may occur. If the Company were required to make substantial modifications at its
facilities to comply with the ADA or other changes in governmental rules and
regulations, the Company's financial condition and ability to develop new hotels
could be materially and adversely affected.
MARKET CONCENTRATION
The Company's existing seven hotels are located in the state of Texas. While
the Company will be constructing hotels in Phoenix, Arizona, Denver, Colorado,
Lenexa, Kansas, Orlando, Florida and Indianapolis, Indiana and intends to
continue to build or acquire hotels throughout the United States, adverse events
or conditions which affect Texas particularly (such as natural disasters or
adverse changes in local economic conditions) could have a more pronounced
negative impact on the operations of the Company until such diversification of
local market risks is in fact achieved.
9
<PAGE>
PROPERTY TAX AND INSURANCE RATE FLUCTUATIONS
Each of the Company's properties is subject to real property taxes. Real
property taxes may increase as property tax rates change and as the properties
are assessed or reassessed by taxing authorities. Also, each of the Company's
properties is covered by property and casualty insurance. Property and casualty
insurance rates may increase depending upon claims experience, insurance market
conditions and the replacement value of the hotels.
RISKS ASSOCIATED WITH ACQUISITIONS
Although the Company expects that the construction and development of new
extended-stay hotels will be its primary means of expansion, the Company will,
as part of its growth strategy, consider making future acquisitions of existing
extended-stay hotels or other properties that are presently consistent with or
are suitable for conversion to the Company's extended-stay concept. The Company
regularly pursues and evaluates acquisition opportunities of extended-stay
lodging facilities or facilities that may be converted to the Company's
extended-stay lodging concept, and at any given time may be in various stages of
evaluating such opportunities. Such stages may take the form of internal
property analysis, preliminary due diligence, the submission of an indication of
interest, preliminary negotiations, negotiation of a letter of intent or
negotiation of a definitive agreement. While the Company is currently evaluating
a number of acquisition opportunities (some of which may be material in size to
the Company), other than a committment to acquire two additional hotels located
in the Austin, Texas area upon development and completion of such properties,
the Company has not signed a letter of intent, nor does it have any
commitment or understanding, with respect to any material acquisition and
currently has no assurance of completing any particular material acquisition or
of entering into negotiations with respect to any material acquisition.
[CONFIRM] If the Company does make any such acquisitions, it will encounter
various associated risks, including possible environmental and other regulatory
costs, diversion of management's attention, unanticipated problems in converting
such properties to the quality standards of the Company's prototype and
unanticipated liabilities, some or all of which could have a material adverse
effect on the Company's earnings and operations.
RELIANCE ON KEY PERSONNEL
The Company's success will depend to a significant extent upon the efforts and
abilities of its senior management and key employees, particularly Robert A.
Faith, the Chairman of the Board, Chief Executive Officer and President, and
John C. Kratzer, the Executive Vice President and Chief Operating Officer. The
loss of the services of any of these individuals could have a material adverse
effect upon the Company. Messrs. Faith and Kratzer have agreed, subject to
certain exceptions and certain limitations, not to compete with the Company. The
Company does not have employment or consulting agreements with any of its
officers other than Mr. Kratzer, nor does it carry key man life insurance on any
of its officers.
CONTROL OF THE COMPANY BY MANAGEMENT AND PRINCIPAL STOCKHOLDERS
The officers and Directors of the Company and TCR, Greystar and Crow and their
affiliates will beneficially own approximately 59.7% of the outstanding shares
of Common Stock. By reason of such holdings, such stockholders acting as a group
will be able to control the affairs and policies of the Company and will be able
to elect a sufficient number of Directors to control the Company's Board of
Directors. In addition, such stockholders acting as a group will be able to
approve or disapprove most matters submitted to a vote of the stockholders. Crow
and Greystar have entered into a stockholders' agreement (the "Stockholders'
Agreement") by which they have agreed to act in concert with respect to the
election of Company Directors.
ANTI-TAKEOVER CONSIDERATIONS
Staggered Board of Directors. The Board of Directors is divided into three
classes serving staggered terms. The terms of the directors will expire in 1997,
1998, and 1999. The staggered terms of Directors may limit the ability of
holders of Common Stock to change control of the Company even if a change of
control were in such stockholders' best interests. The foregoing may discourage
offers or other bids for the Common Stock at a premium over the market price
thereof.
10
<PAGE>
Certificate of Incorporation and Bylaws. The ownership positions of the
officers and Directors of the Company and of TCR, Greystar, and Crow and their
affiliates, together with the anti-takeover effect of certain provisions of the
Company's Certificate of Incorporation and Bylaws, may have the effect of
delaying, deterring or preventing a takeover of the Company that stockholders
purchasing Shares being offered herein may consider to be in their best
interest. The Company's Certificate of Incorporation requires that any merger or
other business combination involving the Company be approved by at least 66 2/3%
of the shares of Common Stock outstanding, that all stockholder actions must be
effected at a duly-called annual or special meeting of the stockholders, and
that stockholders follow an advance notification procedure for certain
stockholder nominations of candidates for the Board of Directors and for certain
other business to be conducted at any stockholders' meeting. In addition, the
Company's Certificate of Incorporation authorizes the Board of Directors to
issue up to 5,000,000 shares of preferred stock, having such rights, preferences
and privileges as designated by the Board of Directors, without stockholder
approval. The issuance of such preferred stock could inhibit a change of
control.
Delaware Anti-takeover Statute. Section 203 of the Delaware General
Corporation Law, which is applicable to the Company, restricts certain business
combinations with interested stockholders upon their acquiring 15% or more of
the Common Stock. This statute may have the effect of inhibiting a non-
negotiated merger or other business combination involving the Company, even if
such event would be beneficial to the then-existing stockholders.
Stockholders' Agreement. Pursuant to a Stockholders' Agreement, each of Crow
and Greystar has certain rights of first refusal with respect to shares of
Common Stock held by the other. In addition, Crow and Greystar have agreed to
act in concert with respect to the election of Company Directors. These
provisions may have the effect of inhibiting a change in control of the Company.
SHARES ELIGIBLE FOR FUTURE SALE
As of the date of this Prospectus, the 4,325,000 shares of Common Stock sold
by the Company in its initial public offering ("IPO") are eligible for immediate
sale. The 13,913 Shares being offered herein (as described in "Selling
Stockholders") are eligible for immediate resale in the public market, subject
to volume limitations imposed by Rule 144 promulgated under the Securities Act.
See "Plan of Distribution." Approximately 6,400,000 shares of Common Stock
either are eligible or will become eligible for sale in the public market at
various times in the future, subject to compliance with an exemption from the
registration requirements of the Securities Act. The holders of these 6,400,000
shares have agreed that they will not sell any shares of Common Stock held by
them for a period of 360 days from the date of the IPO without the consent of
Bear, Stearns & Co. Inc., one of the representatives of the underwriters of the
sale of Common Stock in the IPO. Such holders have certain rights, beginning one
year after the date of the completion of the IPO, to request the Company to file
a registration statement under the Securities Act with respect to the resale by
such stockholders of all of the shares of Common Stock owned at that time by
such stockholders. Shares so registered could be sold in the public market by
such stockholders at any time on or after the date such registration statement
is declared effective. No predictions can be made as to the effect, if any, that
market sales of such shares or the availability of such shares for sale will
have on the market price for shares of Common Stock prevailing from time to
time. Sales of substantial amounts of shares of Common Stock in the public
market following the IPO could adversely affect the market price of the Common
Stock and could impair the Company's future ability to raise capital through an
offering of equity securities.
ABSENCE OF DIVIDENDS
The Company intends to retain its earnings to finance its growth and for
general corporate purposes and therefore does not anticipate paying any cash
dividends in the foreseeable future. In addition, future financing agreements
will contain limitations on the payment of cash dividends or other distributions
of assets.
11
<PAGE>
PLAN OF DISTRIBUTION
The Shares were issued to the Selling Stockholders pursuant to the 1996 Plan.
The Shares may be sold from time to time to purchasers directly by any of the
Selling Stockholders. Alternatively, each of the Selling Stockholders may from
time to time offer his Shares through underwriters, dealers or agents, who may
receive compensation in the form of underwriting discounts, concessions or
commissions from the Selling Stockholder and/or purchasers of the Shares for
whom they may act as agent. The Selling Stockholders and any underwriters,
dealers or agents that participate in the distribution of the Shares might be
deemed to be underwriters, and any profit on the sale of such Shares by them and
any discounts, commissions or concessions received by any such underwriters,
dealers or agents might be deemed to be underwriting discounts and commissions
under the Securities Act. At the time a particular offer of any of the Shares is
made by a Selling Stockholder, to the extent required pursuant to the Securities
Act, a supplement to this Prospectus will be distributed which will set forth
the number of shares of stock being offered and the terms of the offering,
including the name or names of any underwriters, dealers and agents, any
discounts, commissions and other items constituting compensation from the
Selling Stockholder and any discounts, commissions or concessions allowed or
reallowed or paid to dealers. The Company will not bear any expenses incurred by
any of the Selling Stockholders in connection with the sale of the Shares
offered hereby other than expenses relating to the registration of the offer and
sale of the Shares under the Securities Act.
The Shares may be sold from time to time in one or more transactions on
NASDAQ. Any such sales will be made at prices prevailing on the date of the
sale.
12
<PAGE>
SELLING STOCKHOLDERS
The following table sets forth certain information with respect to beneficial
ownership of the Common Stock by each of the Selling Stockholders as of January
17, 1997. Unless otherwise indicated, each person named below has sole voting
and investment power with respect to all shares of Common Stock shown as
beneficially owned by such person, subject to community property laws, if
applicable.
<TABLE>
<CAPTION>
NUMBER OF SHARES NUMBER OF SHARES
BENEFICIALLY OWNED NUMBER OF SHARES BENEFICIALLY OWNED
NAME OF SELLING STOCKHOLDER PRIOR TO OFFERING BEING OFFERED AFTER OFFERING(1)
- ----------------------------- ------------------ ---------------- ---------------------
<S> <C> <C> <C>
Tim V. Keith (2)............. 4,348 4,348 0
Joel Kinzie Oldham IV (3).... 4,348 4,348 0
Mark Dempsey................. 1,957 1,957 0
Greg Clay.................... 1,086 1,086 0
Michelle Cole................ 652 652 0
Elizabeth Ducote............. 652 652 0
Sue Allen.................... 450 450 0
Ben Phillips................. 105 105 0
Angie Pace................... 105 105 0
Ann Murray................... 105 105 0
Jocelyn Armstrong............ 105 105 0
</TABLE>
- -------------------------
(1) Assumes the sale of all Shares registered hereunder, although none of the
Selling Stockholders are under any obligation known to the Company to sell
any Shares.
(2) Tim V. Keith is the treasurer of the Company.
(3) Joel Kinzie Oldham IV is the secretary of the Company.
Mark Dempsey, Greg Clay, Michelle Cole and Elizabeth Ducote are employees
of the Company. The remaining Selling Stockholders are consultants of the
Company.
USE OF PROCEEDS
Each Selling Stockholder will receive all of the net proceeds from the sale
of the Shares owned by such Selling Stockholder and offered hereby. The Company
will not receive any of the proceeds from the sale of such Shares.
LEGAL OPINION
The legality of the Shares offered hereby will be passed upon for the
Company by Vinson & Elkins L.L.P., Dallas, Texas.
EXPERTS
The Company's balance sheet as of August 22, 1996, the financial statements
of Extended Stay Limited Partnership as of June 30, 1996, and for the period
from inception (February 9, 1996) through June 30, 1996, and the combined
financial statements of Westar as of December 31, 1994 and 1995, and for the
three years ended December 31, 1995, appearing in the Company's prospectus dated
October 24, 1996, have been audited by Ernst & Young LLP, independent auditors,
as set forth in their reports thereon included therein and incorporated herein
by reference.
13
<PAGE>
The information for Extended Stay Limited Partnership as of June 30, 1996,
and for the period from inception (February 9, 1996) through June 30, 1996, and
for Westar for the three years ended December 31, 1995, under the caption
"Selected Financial Data" appearing in the Company's prospectus dated October
24, 1996, have been derived from financial statements of Extended Stay Limited
Partnership and the combined financial statements of Westar audited by Ernst &
Young LLP, independent auditors, as set forth in their reports thereon included
therein and incorporated herein by reference.
Such financial statements, combined financial statements and selected
financial data are incorporated herein by reference in reliance upon such
reports given upon the authority of such firm as experts in accounting and
auditing.
14
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
---------------------------------------
The following documents have been filed with the Securities and Exchange
Commission by the Company, and are incorporated herein by reference and made a
part hereof:
(a) Current Report on Form 8-K as filed with the Commission pursuant to the
Exchange Act, on January 15, 1997;
(b) Quarterly Report on Form 10-Q for the quarterly period ended September
30, 1996, as filed with the Commission pursuant to the Exchange Act, on
December 9, 1996;
(c) The Company's prospectus dated October 24, 1996, as filed with the
Commission pursuant to Rule 424(b) under the Securities Act; and
(d) The description of the Company's Common Stock, $.01 par value per
share, contained in Item 1 of the Company's Registration Statement on
Form 8-A (File No. 0-21509) filed with the Commission pursuant to the
Exchange Act on October 9, 1996.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14
and 15(d) of the Exchange Act, subsequent to the effective date hereof and prior
to the filing of a post-effective amendment hereto that indicates that all
securities offered hereby have been sold or that deregisters all such securities
then remaining unsold, shall be deemed to be incorporated herein by reference
and to be a part hereof from the date of filing of such documents. Any
statement contained herein or in any document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Registration Statement to the extent that a statement
contained herein or in any other subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed to
constitute a part of this Registration Statement, except as so modified or
superseded.
ITEM 4. DESCRIPTION OF SECURITIES.
-------------------------
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
--------------------------------------
Not applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
-----------------------------------------
Article Sixteenth of the Certificate of Incorporation of the Company
provides that the Company shall indemnify its officers and directors to the
maximum extent allowed by the Delaware General Corporation Law. Pursuant to
Section 145 of the Delaware General Corporation Law, the Company generally has
the power to indemnify its present and former directors and officers against
expenses and liabilities incurred by them in connection with any suit to which
they are, or are threatened to be made, a party by reason of their serving in
those positions so long as they acted in good faith and in a manner they
reasonably believed to be in, or not opposed to, the best interests of the
Company, and with respect to any criminal action, so long as they had no
reasonable cause to believe their conduct was unlawful. With respect to suits
by or in the right of the Company, however, indemnification is generally limited
to attorneys' fees and other expenses and is not available if the person is
adjudged to be liable to the Company, unless the court determines that
indemnification is appropriate. The statute expressly provides that the power
to indemnify authorized thereby is not exclusive of any rights granted under any
bylaw, agreement, vote of stockholders or disinterested directors, or otherwise.
The Company also has the power to purchase and maintain insurance for its
directors and officers. Additionally, Article Sixteenth of the Certificate of
Incorporation provides that, in the event that an officer or director files suit
against the
II-1
<PAGE>
Company seeking indemnification of liabilities or expenses incurred, the burden
will be on the Company to prove that the indemnification would not be permitted
under the Delaware General Corporation Law.
The preceding discussion of the Company's Certificate of Incorporation and
Section 145 of the Delaware General Corporation Law is not intended to be
exhaustive and is qualified in its entirety by the Certificate of Incorporation
and Section 145 of the Delaware General Corporation Law.
The Company has entered into indemnity agreements with its directors and
officers. Pursuant to such agreements, the Company will, to the extent
permitted by applicable law, indemnify such persons against all expenses,
judgments, fines and penalties incurred in connection with the defense or
settlement of any actions brought against them by reason of the fact that they
were directors or officers of the Company or assumed certain responsibilities at
the direction of the Company.
In accordance with Section 145(g) of the Delaware General Corporate Law,
and the authority granted under the Certificate of Incorporation and the Bylaws
of the Company, the Company has obtained insurance to protect officers and
directors from certain liabilities, including liabilities against which the
Company cannot indemnify its Directors and officers.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
-----------------------------------
Not applicable.
ITEM 8. EXHIBITS.
--------
Unless otherwise indicated below as being incorporated by reference to
another filing of the Company with the Commission, each of the following
exhibits is filed herewith:
3.1 -- Certificate of Incorporation of the Company (incorporated by
reference to Exhibit 3.1 to the Company's Registration Statement
on Form S-1, File No. 333-11113)
3.2 -- Bylaws of the Company (incorporated by reference to Exhibit 3.2
to the Company's Registration Statement on Form S-1, File No.
333-11113)
4.1 -- Homegate Hospitality, Inc. 1996 Long-Term Incentive Plan
(incorporated by reference to Exhibit 10.4 to the Company's
Registration Statement on Form S-1, File No. 333-11113)
5.1* -- Opinion of Vinson & Elkins L.L.P.
23.1* -- Consent of Ernst & Young LLP
23.2* -- Consent of Ernst & Young LLP
23.3 -- Consent of Vinson & Elkins L.L.P. (included in its opinion filed
as Exhibit 5.1 hereto)
24.1* -- Power of Attorney (see signature pages hereto)
- ------------------
* Filed herewith.
II-2
<PAGE>
ITEM 9. UNDERTAKINGS.
------------
The Company hereby undertakes:
(1) to file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) to include any prospectus required by section 10(a)(3) of the
Securities Act;
(ii) to reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent post-
effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
Registration Statement; and
(iii) to include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or any
material change to such information in the Registration Statement;
provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Company pursuant
to section 13 or section 15(d) of the Exchange Act that are incorporated by
reference in this Registration Statement.
(2) That, for the purposes of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
Registration Statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
(4) That, for purposes of determining any liability under the Securities
Act, each filing of the Company's annual report pursuant to section 13(a) or
section 15(d) of the Exchange Act that is incorporated by reference in the
Registration Statement shall be deemed to be a new Registration Statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(5) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Company pursuant to the foregoing provisions, or otherwise, the Company has been
advised that in the opinion of the Commission such indemnification is against
public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Company of expenses incurred or paid
by a director, officer or controlling person of the Company in the successful
defense of any action, suit or proceeding) is asserted by such director, officer
or controlling person in connection with the securities being registered, the
Company will, unless in the opinion of its counsel the matter has been settled
by controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Company certifies that it has reasonable grounds to believe that it meets all of
the requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Dallas, State of Texas, on the 24th day of
January, 1997.
HOMEGATE HOSPITALITY, INC.
By: /s/ Robert A. Faith
----------------------------------------
Robert A. Faith
President, Chief Executive Officer and
Chairman of the Board
Each person whose signature appears below authorizes Robert A. Faith and
Anthony W. Dona, and each of them, each of whom may act without joinder of the
other, to execute in the name of each such person who is then an officer or
director of the Company and to file any amendments to this Registration
Statement necessary or advisable to enable the Company to comply with the
Securities Act of 1933, as amended, and any rules, regulations and requirements
of the Securities and Exchange Commission in respect thereof, in connection with
the registration of the securities which are the subject of this Registration
Statement, which amendments may make such changes in the Registration Statement
as such attorney may deem appropriate.
<TABLE>
<CAPTION>
Signature Capacity Date
--------- -------- ----
<S> <C> <C>
/s/ Robert A. Faith
- ------------------------------- President, Chief Executive Officer and January 24, 1997
Robert A. Faith Chairman of the Board (Principal Executive
Officer)
/s/ Tim V. Keith
- ------------------------------- Chief Financial Officer (Principal January 24, 1997
Tim V. Keith Financial and Accounting Officer)
/s/ William B. Buchanan, Jr.
- ------------------------------- Director January 24, 1997
William B. Buchanan, Jr.
/s/ James D. Carreker
- ------------------------------- Director January 24, 1997
James D. Carreker
/s/ Harlan R. Crow
- ------------------------------- Director January 24, 1997
Harlan R. Crow
/s/ Anthony W. Dona
- ------------------------------- Director January 24, 1997
Anthony W. Dona
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
- ------------------------ Director ____________, 1997
John R. Huff
/s/ Charles E. Noell
- ------------------------ Director January 24, 1997
Charles E. Noell
/s/ John J. Moores
- ------------------------ Director January 24, 1997
John J. Moores
/s/ Leonard W. Wood
- ------------------------ Director January 26, 1997
Leonard W. Wood
</TABLE>
II-5
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Sequential
Exhibit Description of Exhibit Page No.
- ------- ---------------------- ----------
<C> <S> <C>
3.1 -- Certificate of Incorporation (incorporated by reference to Exhibit 3.1
to the Company's Registration Statement on Form S-1, File No. 333-
1113)
3.2 -- Bylaws of the Company (incorporated by reference to Exhibit 3.2 to
the Company's Registration Statement on Form S-1, File No. 333-
11113)
4.1 -- Homegate Hospitality, Inc. 1996 Long-Term Incentive Plan
(incorporated by reference to Exhibit 10.4 to the Company's
Registration Statement on Form S-1, File No. 333-11113)
5.1* -- Opinion of Vinson & Elkins L.L.P.
23.1* -- Consent of Ernst & Young LLP
23.2* -- Consent of Ernst & Young LLP
23.3 -- Consent of Vinson & Elkins L.L.P. (included in its opinion filed as
Exhibit 5.1 hereto)
24.1* -- Power of Attorney (see signature pages hereto)
- -----------------
* Filed herewith.
</TABLE>
<PAGE>
EXHIBIT 5.1
WRITER'S FAX NUMBER
(214) 220-7700 (214) 999-7716
January 23, 1997
Homegate Hospitality, Inc.
111 Congress Avenue
Suite 2600
Austin, Texas 78701
Ladies and Gentlemen:
We are acting as counsel for Homegate Hospitality, Inc., a Delaware
corporation (the "Company"), in connection with the filing of a registration
statement on Form S-8 (the "Registration Statement") relating to a proposed
periodic offering and sale of up to an aggregate of 1,250,000 shares (the
"Shares") of the Company's common stock, par value $.01 per share (the "Common
Stock"), which may be issued pursuant to options under the Homegate Hospitality,
Inc. 1996 Long-Term Incentive Plan (the "Plan").
In this connection, we have examined the corporate records of the Company,
including its Certificate of Incorporation, its Bylaws, and certain resolutions
of the Board of Directors of the Company. We have also examined the
Registration Statement, together with exhibits thereto, and such other
certificates of officers of the Company and of public officials, documents and
records as we have deemed necessary or appropriate for the purposes of this
opinion. As to matters of fact relevant to the opinions expressed herein, as to
factual matters arising in connection with our examination of corporate
documents, records and other documents and writings, we have relied upon
certificates and other communications of corporate officers of the Company,
without further investigation as to the facts set forth therein.
Based upon the foregoing, we are of the opinion that the Shares to be issued
upon the exercise of options granted pursuant to the Plan have been validly
authorized for issuance and, when (a) the Registration Statement has become
effective under the Securities Act of 1933 (the "Securities Act"), (b) the
pertinent provisions of any state securities laws, as may be applicable, have
been complied with and (c) the Shares are issued and paid for in accordance with
the terms of the Plan, the Shares so issued will be validly issued, fully paid
and nonassessable.
In rendering the opinions set forth above, we have assumed that (i) all
information contained in all documents reviewed by us is true and correct, (ii)
all signatures on all documents reviewed by us are genuine, (iii) all documents
submitted to us as originals are true and complete, (iv) all documents submitted
to us as copies are true and complete copies of the originals thereof, and (v)
each natural person signing any document reviewed by us had the legal capacity
to do so.
We express no opinion as to the requirements of or compliance with federal
or state securities laws or regulations.
We are counsel admitted to practice law in the State of Texas, and this
opinion is limited to the laws of the State of Texas, the General Corporation
Law of the State of Delaware and the federal laws of the United States of
America.
We express no opinion as to any matter other than as expressly set forth
above, and no opinion may be inferred or implied herefrom. This opinion is
given as of the date hereof, and we undertake no, and hereby disclaim any,
obligation to advise the Company or anyone else of any change in any matter set
forth herein.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement, but we do not thereby admit that we are within the class
of persons whose consent is required under
<PAGE>
Homegate Hospitality, Inc.
January 23, 1997
Page 2
the provisions of the Securities Act or the regulations of the Securities and
Exchange Commission issued thereunder.
Very truly yours,
VINSON & ELKINS L.L.P.
/s/ Vinson & Elkins L.L.P.
<PAGE>
Exhibit 23.1
Consent of Independent Auditors
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-8) dated on or about January 27, 1997 pertaining
to the Homegate Hospitality, Inc. 1996 Long-Term Incentive Plan and to the
incorporation by reference therein of our report dated August 22, 1996, with
respect to the balance sheet of Homegate Hospitality, Inc. and our report dated
August 8, 1996, with respect to the financial statements of Extended Stay
Limited Partnership, included in the Registration Statement (Form S-1 No. 333-
11113) and related Prospectus of Homegate Hospitality, Inc., filed with the
Securities and Exchange Commission.
ERNST & YOUNG LLP
Dallas, Texas
January 27, 1997
<PAGE>
Exhibit 23.2
Consent of Independent Auditors
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-8) dated on or about January 27, 1997 pertaining
to the Homegate Hospitality, Inc. 1996 Long-Term Incentive Plan and to the
incorporation by reference therein of our report dated August 2, 1996, with
respect to the combined financial statements of Westar included in the
Registration Statement (Form S-1 No. 333-11113) and related Prospectus of
Homegate Hospitality, Inc., filed with the Securities and Exchange Commission.
ERNST & YOUNG LLP
San Antonio, Texas
January 27, 1997
